The law of one price works well for _____ traded commodities.

Question

Quizplus · Accepted Answer

The law of one price states that in the absence of trade frictions (like transportation costs and tariffs), the price of an identical good will be the same across different markets when prices are expressed in the same currency. This principle tends to hold more accurately for heavily traded commodities, as their prices are more transparent and arbitrage opportunities (buying low in one market and selling high in another) are quickly exploited, aligning prices across different markets.

The Law of One Price Works Well for _____ Traded